Is Foxtons going up for sale?

Press speculation is growing that the London estate agency giant could be sold, with Dexters named among a host of potential buyers.

Foxtons last week appointed merger and acquisition bankers from Rothschild to work alongside its brokers Deutsche Numis and Singer Capital Market amid increasing pressure from shareholders to sell itself by the end of this year.

The move came after its largest shareholder publicly called on the board of the estate agency group to find a purchaser.

Canadian investor Converium Capital, which owns about 5.3% of the business, and UK-based Milkwood Capital, which owns 5%, have both said they want Foxtons to find a buyer for the business.

A follow-up report in The Sunday Times yesterday suggests that Dexters, Platinum Equity – the US owner of the Leaders Romans Group – and Emeria, a European private equity-owned property business that last year bought Chestertons, could be among the firms keen to buy Foxtons.

“We think now is a very logical time for a sale”, said Michael Rapps, managing partner at Converium Capital, which owns 6% of Foxtons. “They’ve cleaned up all the mistakes of the past and are in a good position. But there are a number of private equity-backed agencies that would like to own more and bigger agencies. And Foxtons doesn’t necessarily have the capital that is required to compete with some of these private equity-backed players.”

Rapps and some other shareholders believe Foxtons could be sold for up to £300m, or 70p to £1 a share.

But views are divided. Other big investors believe the company has turned a corner under its new chief executive Guy Gittins, who was appointed in 2022. They argue that Foxtons can become one of the biggest players in the UK property market once more while remaining a listed company.

Foxtons’ financial results have improved under Guy Gittins’ stewardship since he took charge in 2022, with the company’s share price up more than 50% since his arrival. Its final-year results for 2023 showed revenue up 5% to £147.1m, with its lettings revenue, now 70% of the total, increasing by 16% to £101.2m. Sales fell by 14% to £37.2m, but outperformed a 24% market decline. Its first-quarter results for this year showed revenue up 9% to £35.7m.

Gittins said the key to Foxtons’ success is getting the best out of its staff, who now number 1,300 across its 58 branches in London and Surrey.

“Lettings is absolutely our priority. We want to grow and focus on this beautiful recurring lettings income,” Gittins said. “We’ve pivoted and are now first and foremost a lettings business. We are the largest lettings business in the UK by volume of instructions.”

Gittins has refused to be drawn to comment on a sale.

“I’ve been trying to find a really nice Mini keyring. I’m going to talk about it with my marketing team,” he added. “I spend a lot of time in the front offices talking to our staff, and that pride is coming back. And if the pride is there, we will deliver better results. We’re only at the start of the journey.”